ncua

Consider Switching from a Bank to a Credit Union

Many consumers don’t realize that they are likely eligible to join a credit union.  Credit Unions have evolved over the years to being full-service financial institutions that offer the same services that you can get at your bank. At one time, being a member of a credit union usually meant having to work for a certain employer or belong to a certain organization, however, now the vast number of credit unions have what is called a community charter. A community charter means that anyone who lives, works, worships, etc in the community (or communities) that the credit union is chartered for is eligible to join.

Credit unions are owned by the members (account holders) of the credit union. When you join a credit union, you will have to keep a minimum deposit in your account, this minimum deposit marks your ownership in the credit union. The minimum deposit is usually somewhere between $5 and $25. In contrast, banks are owned by stockholders and are controlled by paid officials and stockholders. The owners of a credit union (in other words “the members”) elect a volunteer board of directors to represent their interests in the oversight of the credit union.

Like community banks, credit unions are often both headquartered and operated in the community they serve. Bringing your business to your local credit union helps to stimulate your local economy. This is in contrast to the large regional or national banks where the higher paid jobs are most likely going to workers who are half-way across the country.

Credit unions offer several important benefits over banks. The first is that credit unions typically offer lower loan rates and higher deposit rates than banks. Click here for a comparison of credit union rates and bank rates. In addition to being more competitive with rates, credit unions often have lower fees than banks. Examples of these fees are NSF fees, wire transfer fees, returned check fees, etc. Another benefit of credit unions is that since credit unions are often smaller in scale and more localized than national banks, account errors or concerns are often resolved more quickly and members often even have access to talking to executive level management when they have an unresolved problem or concern.

If you are a person who travels a lot and therefore chooses a national bank for the convenience of having access to your bank’s ATMs while traveling, credit unions offer a solution for this. Most credit unions belong to an ATM network of other credit unions where members of credit unions who are on the same network can share ATMs without a fee. These networks are nationwide, so it is possible to have a credit union account in Maine and use the ATM machine at a credit union in California without incurring a fee.

What about safety? Your money is just as safe at an insured credit union as it is at an insured bank. While most banks have FDIC insurance that covers your accounts up to $250,000, most credit unions are insured by the NCUA which also covers your accounts up to $250,000. FDIC insurance and NCUA insurance both serve the same purpose and are both reliable deposit insurance agencies who are backed by the U.S. government.

In summary, chances are you are eligible to become a member at a local credit union and credit unions typically offer more competitive rates, while offering the same financial services as banks.

Learn more:

Protect Your Surviving Spouse/Family Members

Renting isn’t so Bad

How Your Credit Score Determines Your Interest Rate

Mobile Payment Laws:Federal Deposit Insurance 18/NCUA Share Insurance 19

FDIC and NCUA: Protects funds of depositors in insured depository institutions and of members of insured credit unions in the event of failure of the institution. Applies to “deposits” and “accounts” as defined in laws and regulations of the FDIC and National Credit Union Administration. These include savings accounts and checking accounts at banks and share accounts and share draft accounts at credit unions.   It is applicable to mobile payments if the funds underlying a mobile payment are deposited in an account covered by deposit insurance or share insurance, the owner of the funds will receive deposit or share insurance coverage for those funds up to the applicable limit.  
Additionally, FDIC’s committee on economic inclusion (ComE-IN), tries to help under-served into the mainstream. It has started Mobile Financial Services (MFS) to study how the unbanked used MFS. Deposit insurance or share insurance does not guarantee that a consumer’s funds will be protected in the event of a bankruptcy or insolvency of a nonbank entity in the mobile payment chain.

FDIC Sec 18: https://www.fdic.gov/regulations/laws/rules/1000-2000.html
NCUA:http://www.ncua.gov/legal/guidesetc/guidesmanuals/ncuayourinsuredfunds.pdf

South Florida Federal Credit Union Seeks New Regulator

Get the best Credit Tips at Credit Visionary

South Florida Federal Credit Union is in the market for a new regulatory authority after being examined by the National Credit Union Administration for irregular loan handouts.

Two previous workers have submitted a lawsuit versus the cooperative credit union and CEO Maggie Martinez over allegations that they were fired due to the fact that they worked together with a recurring NCUA examination into the CEO and Miami credit unions.

Both former employees informed NCUA regulatory authorities that Martinez had made incorrect loans to family members who were in monetary problems, in addition to employed relative who took funds from South Florida Federal Credit Union customers.

SFFCU Makes the Switch From NCUA to State Regulators Amidst Investigation

South Florida Federal Cooperative credit union informed the South Florida Business Journal that the termination of the 2 workers wasn’t related to the cooperation they could’ve had with the NCUA investigation, and denied all present allegations.

However, South Florida Federal Cooperative credit union, worth about $36 million in possessions, is currently seeking a state charter which could help it prevent the NCUA examination later on. If its application to switch to a state charter undergoes, the Florida Office of Financial Law would become its primary regulatory authority, not the NCUA.

Lost flash drive leads to NCUA Data Breach

When it comes to handling customer data, organizations should keep two major points in mind: Data should be carefully stored and encrypted, with access being limited to key individuals. If the data is compromised, those affected should be notified immediately, so they can take necessary precautions should that data fall into the wrong hands. Those points should be drilled into both a Credit Union and an examiner/auditor.

On December 15th the NCUA (National Credit Union Administration) commented that an external flash drive containing the names, addresses, account numbers and Social Security Numbers belonging to members of the $13 million Palm Springs Federal Credit Union, located in California, was lost or misplaced. This came after an anonymous informant pointed their finger at an NCUA examiner, though the NCUA itself only confirmed the loss, and did not confirm its responsibility.

“NCUA confirms the loss of a thumb drive during an exam, which did not include passwords or PINs. NCUA has received no indication of any unauthorized access to members’ accounts or attempts to gain improper access,” said John Fairbanks, public affairs specialist.

“Surely, the examiners should comply with the same types of restrictions the institutions they examine have to contend with to provide adequate security,” says Shirley Inscoe, a financial fraud expert and analyst for consultancy Aite.

Now keep in mind that this flash drive was lost “sometime around” October 20th and it took the Credit Union 10 days to send a letter to its members to inform them…10 days to SEND A LETTER.

“At this time we do not know if the external drive has been inadvertently destroyed or if it was acquired by an unauthorized person,” the credit union writes. “All we know is that it is lost.”

Storing such important data on something that could easily be lost or stolen is shocking to say the least. Banking regulators and institutions are cast in a dismal light by how some, not all, of their colleagues manage critical customer data. Though not proven to be at fault, many are up in arms over the fact that the NCUA examiners are responsible for promoting the safety of credit unions, not tarnishing it.

All it takes is some further thought into using secure file transfer portals, encryption or even use of a secure document upload system that enforces two-factor authentication.

“It would probably help if the exam team established a formal protocol with the CU prior to the exam, outlining the procedures for delivering and handling data, and requiring certain files to be password protected and encrypted,” says Anthony Vitale of JDA Software, “There is nothing formal today. Exams are handled mostly by examiners leading and CUs following. There is nothing in the NCUA examiners’ manual addressing the handing of data.”

The NCUA and the NBA

It’s officially basketball season.

Believe it or not, the National Credit Union Administration (NCUA) and the National Basketball Association (NBA) have a few things in common… To help CU members understand better how the NCUA works, we thought it’d be fun to compare its administration to something a little more practical – for example, professional basketball. And no, we aren’t saying the NBA is a walk in the park. It’s a bit more adaptable than the NCUA. Less rules, more play. 

What is the NCUA? According to the government’s site, the NCUA is an independent federal government agency that charters and supervises federal credit unions and insures accounts in federal and most state-chartered credit unions across the country through the National Credit Union Share Insurance Fund (NCUSIF), a federal fund backed by the full faith and credit of the United States government.

The NCUA is an independent federal agency created by the US Congress. The purpose of this administration is to regulate, charter and supervise federal credit unions.

The NBA is an association that operates like NCUA; it regulates, charters and supervises the teams that are in its league.

Both the NCUA and NBA are national governing bodies for their members (credit unions and basketball teams). They work to support and regulate business – although basketball is considered a sport, much like a credit union, it works like a business and consists of members governing members. For basketball, the players are its members. The purpose of the NBA is to ensure the players are in good condition and that all teams play fairly and continue to be one of the world’s premier sports and entertainment enterprises. For credit unions, how the NCUA operates is that it makes sure CUs and their members are staying in compliance. If we think about it, business will always have that ‘referee’ involved, guaranteeing a fair game for all. 

To learn more about the NCUA, here are a few websites that we keep track of to stay in the hoop – we mean, loop

NCUA Website - About 

My Credit Union.Gov

A Credit Union’s Input on the NCUA - Video Included

NCUA YouTube Channel

NCUA, AARP Will Work Together to Promote Financial Literacy and Consumer Education http://t.co/F54eXjgchE


NCUA, AARP Will Work Together to Promote Financial Literacy and Consumer Education http://t.co/F54eXjgchE

— #IAMDIGITAL (@IAMDIGITALENT) September 17, 2014

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September 17, 2014 at 04:04AM
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from NCUA, AARP Will Work Together to Promote Financial Literacy and Consumer Education http://t.co/F54eXjgchE
Details on FFIEC Guidelines – Procedures Are Ever Changing

Last month, the Federal Financial Institutions Examination Council (FFIEC) published social media guidance for financial institutions such as banks, savings associations, credit unions, and nonbank entities supervised by the Consumer Financial Protection Bureau (CFPB). This Guidance weighs in on the federal consumer protection and compliance laws, regulations, and policies to activities which correspond to online social networks – among all types of consumer and customer communications.

So what does this mean for credit unions? If we think about it, similar practices take place in-house for these financial establishments; in following company protocol, employees have training sessions (which involves testing, etc.) on a regular basis, and consist, for the most part, of learning and relearning new material. This applies to many industries; after working in wholesale mortgage lending for about 5-6 years, I cannot tell you how much material I learned and either tossed or added to while working in that industry. Whether it had to do with online or offline techniques, the mortgage company had training and testing for it.

Procedures are ever changing; as new technologies come into play, we continue to evolve with them. The same applies to social media – the FFIEC knows that banks and other financial institutions are beginning to use this medium more than ever before, and offers such guidance along with other supervision and examination materials. FFIEC’s intentions are to help the institutions understand the potential consumer compliance, legal, reputation and other operational risks associated with the use of such networks, and in addition, the expectations for managing those risk(s). 

After these materials are announced and made available to the public, it is recommended that a credit union modifies its policies, to keep aligned with the financial regulators. Be sure to check out our earlier blog entry, Five Important Components to Social Media for Credit Union Compliancy.

To stay up-to-date and keep track of these regulatory changes, it is always best to stay in contact with and/or connect to these financial authoritative figures via social media, email, and other forms of communication. The following links are just a few of the many organizations to follow – be sure to keep track through all networks as necessary:

Credit Unions Forced to Close Marijuana Accounts

A lack of licensing for marijuana producers make it impossible for credit unions to verify the businesses are operating legally.

It’s been eight months since the U.S. Department of Treasury’s Financial Crimes Enforcement Network issued banking guidelines for state-licensed marijuana businesses, which some heralded as a way to usher the budding industry into the mainstream.

But since then, some credit unions have closed accounts belonging to cannabis companies due to concerns about federal repercussions, according to industry insiders.

A New Mexico credit union closed its marijuana business accounts after a negative reaction by a NCUA field examiner, according to Paul Stull, president/CEO of the Credit Union Association of New Mexico in Albuquerque.

From what I was told, the field examiner’s reaction was quite over the top, said Stull, who declined to name the specific credit union involved in the alleged incident. he examiner said there was no way this could be done legally.

The credit union closed the accounts after an examiner threatened to issue a letter of understanding and agreement if it didn’t do so, Stull said. To his knowledge, there are no credit unions currently offering banking services to New Mexico’s licensed medical marijuana businesses.

Due to the regulatory burden of meeting due diligence requirements, CUANM is advising credit unions to not open the accounts, Stull said.

here are no guarantees in the state of New Mexico to hold any credit union harmless and it is clearly a very dangerous situation for any credit union to currently be involved in that business, he said.

Since more than 20 states have legalized medicinal or recreational marijuana and numerous others are expected to follow suit, the issue of financial services for the marijuana industry is here to stay, experts said. But is the credit union industry ready to navigate the smoky haze of new regulations?

When asked about the alleged incident involving the field examiner in New Mexico, NCUA Public Affairs Specialist John Fairbanks said the agency cannot comment on examinations or confirm an anonymous report. NCUA field examiners have been trained to follow the FinCEN guidance and to enforce Bank Secrecy Act regulations, he added.

NCUA’s job is to determine whether credit unions understand [the FinCEN guidelines] and are in compliance, Fairbanks said. he decision to open, close or refuse a specific account is generally a business decision of the credit union, provided management has demonstrated sufficient risk management, internal controls, policies, internal audit, and staff expertise, to comply with the Bank Secrecy Act.

The FinCEN guidelines insist on additional policing responsibilities beyond typical BSA requirements, such as requiring financial institutions to verify information about marijuana businesses on a regular basis, submitting reports when a business receives substantially more revenue than its local competitors and developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served.

Read more: FinCEN due diligence impossible.

The $387 million New Mexico’s State Employee Credit Union recently closed seven cannabis accounts after researching the FinCEN guidance, according to Duane Herrera, EVP of the Santa Fe-based cooperative. He said the decision was not related to an NCUA exam.

One problem is that the state of New Mexico does not disclose the names of licensed marijuana producers, even at the request of a credit union, Herrera said.

If we can’t even verify that theyre operating legally, it’s impossible for us to even begin to [do] due diligence, he said. It would have to be a much larger institution to have the staff and financial ability to handle what the guidelines call for and in the current situation, I don’t even know if it could be done then.

In the state of Washington, where some credit unions do have active cannabis accounts, the state provides almost real-time access to financial information about the licensed marijuana businesses, which seems to satisfy the due diligence requirements. according to industry insiders.

Earlier this month in Washington, Russ Rosendal, president/CEO of the $369 million Salal Credit Union in Seattle, told a joint legislative committee that credit unions still have major concerns about the FinCEN guidance.

Rosendal reiterated his concerns in an email to CU Times. Salal currently has eight producer/processor deposit accounts, four retailer deposit accounts and one loan to a producer/processor, he said.

We are finding the up-front due diligence somewhat more extensive than our original assumptions and the on-going monitoring about what we expected, he explained. By using the resources provided by our State Liquor Control Board, who has regulatory authority over cannabis businesses, we expect to streamline our ongoing monitoring.

Rosendal said Salal continues to work with Washington’s State Division of Credit Unions and the NCUA to clarify appropriate due diligence and ongoing monitoring processes.

We also believe the loopholes in the Cole Memo and federal forfeiture and seizure laws need to be clarified to help financial institutions provide banking services to the cannabis industry, he noted.

Read more: Not worth the risk.

According to the U.S. Department of Justice, the Cole Memo, named for Deputy Attorney General James Cole, has several prosecutor provisions including the prohibition of the sale of marijuana to minors and prosecution if profits are used to fund criminal enterprises.

Lynn Ciani, EVP and general counsel at the $1.3 billion Numerica Credit Union in Spokane, Wash. also told that state’s legislators this month that many credit unions and banks aren’t providing financial services to the marijuana industry because of possible criminal penalties.

Although we are used to the large civil penalties and that risk, the whole going to jail thing and wearing orange is probably causing people to take a second thought, Ciani reportedly told the committee.

Frank Snyder, a law professor at Texas AM University and former editor with the Association of American Law Schools, said in a recent article on his blog, Cannabis Law Prof Blog, that the FinCEN guidelines may actually increase the likelihood that financial institutions will violate the law because they impose onerous due diligence and reporting requirements. Others agree.

Even if a financial institution felt confident that it could rely on Department of Justice and FinCEN guidance and that it could implement a robust (but economic) compliance program, the FDIC, NCUA, or Federal Reserve might determine that the institution was not effectively managing its risk and take civil enforcement action, Julie Andersen Hill, an associate professor at the University of Alabama School of Law, wrote in a paper on Banks, Marijuana and Federalism that was published in a national law review.

Brian Kindle, executive director of the Association of Certified Financial Crime Specialists, told CU Times that far more institutions seem to be closing marijuana-link accounts than maintaining them, according to public statements made by FinCEN’s director.

For this issue to be decided permanently, well have to wait for action by Congress, which may be unlikely in the near future, Kindle said. Until then, credit unions and other institutions will likely continue to turn away potentially lucrative [if also higher-risk] customers, and marijuana businesses will remain unbanked.


http://credit.remmont.com/news/credit_unions_forced_to_close_marijuana_accounts/2015-05-22-2937
Credit Unions Forced to Close Marijuana Accounts

A lack of licensing for marijuana producers make it impossible for credit unions to verify the businesses are operating legally.

It’s been eight months since the U.S. Department of Treasury’s Financial Crimes Enforcement Network issued banking guidelines for state-licensed marijuana businesses, which some heralded as a way to usher the budding industry into the mainstream.

But since then, some credit unions have closed accounts belonging to cannabis companies due to concerns about federal repercussions, according to industry insiders.

A New Mexico credit union closed its marijuana business accounts after a negative reaction by a NCUA field examiner, according to Paul Stull, president/CEO of the Credit Union Association of New Mexico in Albuquerque.

From what I was told, the field examiner’s reaction was quite over the top, said Stull, who declined to name the specific credit union involved in the alleged incident. he examiner said there was no way this could be done legally.

The credit union closed the accounts after an examiner threatened to issue a letter of understanding and agreement if it didn’t do so, Stull said. To his knowledge, there are no credit unions currently offering banking services to New Mexico’s licensed medical marijuana businesses.

Due to the regulatory burden of meeting due diligence requirements, CUANM is advising credit unions to not open the accounts, Stull said.

here are no guarantees in the state of New Mexico to hold any credit union harmless and it is clearly a very dangerous situation for any credit union to currently be involved in that business, he said.

Since more than 20 states have legalized medicinal or recreational marijuana and numerous others are expected to follow suit, the issue of financial services for the marijuana industry is here to stay, experts said. But is the credit union industry ready to navigate the smoky haze of new regulations?

When asked about the alleged incident involving the field examiner in New Mexico, NCUA Public Affairs Specialist John Fairbanks said the agency cannot comment on examinations or confirm an anonymous report. NCUA field examiners have been trained to follow the FinCEN guidance and to enforce Bank Secrecy Act regulations, he added.

NCUA’s job is to determine whether credit unions understand [the FinCEN guidelines] and are in compliance, Fairbanks said. he decision to open, close or refuse a specific account is generally a business decision of the credit union, provided management has demonstrated sufficient risk management, internal controls, policies, internal audit, and staff expertise, to comply with the Bank Secrecy Act.

The FinCEN guidelines insist on additional policing responsibilities beyond typical BSA requirements, such as requiring financial institutions to verify information about marijuana businesses on a regular basis, submitting reports when a business receives substantially more revenue than its local competitors and developing an understanding of the normal and expected activity for the business, including the types of products to be sold and the type of customers to be served.

Read more: FinCEN due diligence impossible.

The $387 million New Mexico’s State Employee Credit Union recently closed seven cannabis accounts after researching the FinCEN guidance, according to Duane Herrera, EVP of the Santa Fe-based cooperative. He said the decision was not related to an NCUA exam.

One problem is that the state of New Mexico does not disclose the names of licensed marijuana producers, even at the request of a credit union, Herrera said.

If we can’t even verify that theyre operating legally, it’s impossible for us to even begin to [do] due diligence, he said. It would have to be a much larger institution to have the staff and financial ability to handle what the guidelines call for and in the current situation, I don’t even know if it could be done then.

In the state of Washington, where some credit unions do have active cannabis accounts, the state provides almost real-time access to financial information about the licensed marijuana businesses, which seems to satisfy the due diligence requirements. according to industry insiders.

Earlier this month in Washington, Russ Rosendal, president/CEO of the $369 million Salal Credit Union in Seattle, told a joint legislative committee that credit unions still have major concerns about the FinCEN guidance.

Rosendal reiterated his concerns in an email to CU Times. Salal currently has eight producer/processor deposit accounts, four retailer deposit accounts and one loan to a producer/processor, he said.

We are finding the up-front due diligence somewhat more extensive than our original assumptions and the on-going monitoring about what we expected, he explained. By using the resources provided by our State Liquor Control Board, who has regulatory authority over cannabis businesses, we expect to streamline our ongoing monitoring.

Rosendal said Salal continues to work with Washington’s State Division of Credit Unions and the NCUA to clarify appropriate due diligence and ongoing monitoring processes.

We also believe the loopholes in the Cole Memo and federal forfeiture and seizure laws need to be clarified to help financial institutions provide banking services to the cannabis industry, he noted.

Read more: Not worth the risk.

According to the U.S. Department of Justice, the Cole Memo, named for Deputy Attorney General James Cole, has several prosecutor provisions including the prohibition of the sale of marijuana to minors and prosecution if profits are used to fund criminal enterprises.

Lynn Ciani, EVP and general counsel at the $1.3 billion Numerica Credit Union in Spokane, Wash. also told that state’s legislators this month that many credit unions and banks aren’t providing financial services to the marijuana industry because of possible criminal penalties.

Although we are used to the large civil penalties and that risk, the whole going to jail thing and wearing orange is probably causing people to take a second thought, Ciani reportedly told the committee.

Frank Snyder, a law professor at Texas AM University and former editor with the Association of American Law Schools, said in a recent article on his blog, Cannabis Law Prof Blog, that the FinCEN guidelines may actually increase the likelihood that financial institutions will violate the law because they impose onerous due diligence and reporting requirements. Others agree.

Even if a financial institution felt confident that it could rely on Department of Justice and FinCEN guidance and that it could implement a robust (but economic) compliance program, the FDIC, NCUA, or Federal Reserve might determine that the institution was not effectively managing its risk and take civil enforcement action, Julie Andersen Hill, an associate professor at the University of Alabama School of Law, wrote in a paper on Banks, Marijuana and Federalism that was published in a national law review.

Brian Kindle, executive director of the Association of Certified Financial Crime Specialists, told CU Times that far more institutions seem to be closing marijuana-link accounts than maintaining them, according to public statements made by FinCEN’s director.

For this issue to be decided permanently, well have to wait for action by Congress, which may be unlikely in the near future, Kindle said. Until then, credit unions and other institutions will likely continue to turn away potentially lucrative [if also higher-risk] customers, and marijuana businesses will remain unbanked.


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